The initiation of Alibaba Cloud's second data center in Thailand underscores the ambitious global aspirations of Chinese technology giantsOn February 13, it was officially announced that this new facility aims to empower local businesses in Thailand, Chinese enterprises venturing abroad, and local developers by providing enhanced cloud computing resourcesThis move addresses the surging demand in burgeoning sectors such as the internet and fintech, which are pivotal to the region’s economic landscape.

Strategically located just 50 kilometers from the heart of Thailand's Eastern Economic Corridor, the intentions behind Alibaba Cloud's choice of site are abundantly clearThe new center is designed to support the rapidly evolving tech scene in Bangkok while simultaneously offering industrial cloud services to Chinese players like BYD and CATL, which are expanding their operations in ThailandCoupled with previously established nodes in Korea, Singapore, Indonesia, and the Philippines, Alibaba Cloud is progressively weaving a comprehensive cloud network that spans across the core economic sectors of the ASEAN region.

Reflecting on the ten-year journey from a newcomer in overseas markets to a robust contender, Alibaba Cloud has experienced substantial growthIf we take a step back to 2015, the global public cloud market was heavily dominated by Amazon Web Services (AWS), leaving Chinese firms’ international endeavors looking rather inexperienced at the timeBack then, Alibaba Cloud's international operations focused primarily on supporting cross-border e-commerce, alongside platforms like AliExpress and Lazada, which required robust cloud solutions for their expansive logistics needs.

However, a significant turning point occurred in 2017 with the advancement of the "Belt and Road" initiative, leading to the establishment of Alibaba Cloud's first overseas innovation center in MalaysiaThis new paradigm of leveraging technology for market access demonstrated tangible results, pushing Alibaba Cloud's market share in Southeast Asia from a mere 3.7% in 2018 to 15.2% by 2023, placing it in fierce competition with AWS and Microsoft Azure.

Accelerating their overseas strategy came as a response to mounting pressures in the domestic market

Advertisements

The growth of China's cloud computing sector has slowed to 12%, and with a persistent price war becoming prevalent, local operators have steadily been encroaching on market sharesIn stark contrast, Southeast Asia continues to showcase a staggering compound annual growth rate of 38%, with Indonesia reporting an extraordinary 217% surge in public cloud expenditures in a single quarter.

According to a Gartner report, various Asian nations, including Indonesia, the Philippines, and Thailand, exhibit cloud computing market growth rates around 60%, far surpassing the 30%-40% seen in Western marketsWith predictions that the Southeast Asian cloud computing market will reach $40.3 billion by 2025 and given the current 28% cloud penetration rate among local enterprises—significantly lower than China's 65%—clear opportunities beckon to cloud service providers.

Within this context of evolving digital landscapes, opportunities abound for cloud firms in Southeast AsiaThe current marketplace is witnessing multidimensional competition, illustrated by Microsoft's $1.7 billion investment in data centers in Indonesia, AWS's plans for a regional cloud center in Thailand, and Alibaba Cloud's acquisition of cloud migration contracts with Tiki, a leading e-commerce platform in Vietnam, leveraging its live-streaming e-commerce solutions.

Over a ten-year horizon, Alibaba Cloud is utilizing the Asia-Pacific region as a pivotal base, continually expanding its global footprintData from Gartner indicates that Alibaba Cloud has ascended to become China's largest and the leading cloud service provider within the Asia-Pacific regionMoreover, its overseas market growth has skyrocketed, marking over twenty-fold growth in scale over five years.

However, for the entire Alibaba Group, the significance of Alibaba Cloud's international expansion transcends mere business developmentIn the third quarter of the fiscal year 2024, the revenue of the International Digital Commerce Group surged by 44%, while Alibaba Cloud’s international business also demonstrated impressive growth at 28%. The synergy created from this interdependence is increasingly prominent, with logistics and real-time recommendation systems from Lazada and Daraz deployed on Alibaba Cloud’s Southeast Asian nodes.

This dual-driven model of "business platform plus cloud computing" reflects a distinct Chinese interpretation of Amazon AWS's successful methodology, infused with regional characteristics by packaging and exporting digital solutions garnered from domestic markets

Advertisements

In Indonesia, the BDC data center co-established with telecommunications operator Telkom manages real-time dispatch for Gojek's millions of drivers; in Vietnam, the overall cloud transformation for the Tiki platform has proven Alibaba Cloud’s stability in the face of the tropical climate; and in Singapore, the hybrid cloud architecture built for Sea Group sets a pioneering example for concurrent processing across gaming, e-commerce, and payment services.

As Alibaba Cloud stitches these technological nodes across the map into a cohesive digital service network, the potential is catalyzed further by the advent of the AI eraOn February 13, Alibaba co-founder Joe Tsai confirmed the long-suspected collaboration with Apple, indicating the latter's need for a localized partner within the Chinese market.

This partnership with Apple appears to reflect a prism that projects the unique competitive advantages of Chinese cloud service providersIt signifies Alibaba's departure from solely being labeled as an e-commerce entity, while simultaneously showcasing the visibility of their AI capabilities on a global stage, as well as the compatibility of Tongyi's offerings with Apple's extensive user base.

Such collaboration opens horizons for immense possibilitiesWith Tongyi’s large model reaching hundreds of millions of users via iOS, Alibaba Cloud effectively gains the opportunity to engage in the design of global AI ecosystemsIf the "Model as a Service" (MaaS) commercial model can successfully materialize, it may reshape the competitive landscape for cloud computing providers entirely.

During the announcement of the new data center in Thailand, Alibaba Cloud's International Vice President Yuan Haojun shared insights on the local cloud computing market's rapid expansion, highlighting the immense demand for digital transformation and AI solutions among local companiesHe emphasized Alibaba Cloud's commitment to increase investment and assist local clients in seizing opportunities presented by the AI era.

As we reflect upon the formidable steel structure of the data center overlooking the Gulf of Thailand, the deeper logic behind Alibaba Cloud's overseas endeavors becomes apparent

Advertisements

Advertisements

Advertisements